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Christmas Movies and the Energy World

Here is our latest Christmas themed post and this year we will be comparing the current landscape of Energyland™ to some of the best holiday movies. Enjoy!

–The Nightmare Before Christmas. This one was easy, given the impending fiscal cliff. This nightmare is set to heighten as the countdown clocks appear to be wrong. The very last day any bill can be introduced to Congress is December 18th (if it follows the rule-book), before it ‘is expected’ to adjourn on December 21st. This considerably shortens the window of opportunity to resolve this situation. For equities and commodities alike, the threat of a fiscal cliff becoming a reality would truly become a nightmare before Christmas. (spoiler alert: it will be resolved, one way or another…).

–Rudolph The Red Nosed Reindeer. This inclusion is not for the main character, but for the prospector, Yukon Cornelius, who knows that hard assets such as commodities are the best store of value in the face of fiat currencies. Hence his pursuit of peppermint silver and gold.

–The Bear Who Slept Through Christmas. Yes it’s a movie (which of course I found on Wikipedia). Should we see the fiscal cliff resolved, decent data flow, and further concrete progress in the Euro debt crisis (wow, that’s a Christmas list and a half…), we could well see the bulls come out to play, and the bears sent into a slumber.

–Scrooge. As for the tale of the miserly protagonist of ‘A Christmas Carol’, let us consider the US through the ghost of energy past, present, and energy yet to come. The ghost of energy past is a story of the US relying on oil imports to make up over 60% of consumption in 2005. The ghost of energy present shows this number to be dropping to below 40%, while the ghost of energy yet to come sees the US ramping up domestic production to potentially become the largest global oil producer by 2020, pushing it to within grasping distance of energy independence.

–Gremlins. For there are many gremlins in the works for the oil market, in pockets of geopolitical tension in the Middle East and North Africa. They are springing up like leaks in a dam wall, threatening to burst through and flood chaos into the whole region. From Syria to Iran to Egypt to Gaza.

–Shrek The Halls. Shrek and donkey are the ultimate sidekicks, and mirror the inseparable relationship between crude and the products. While the scary ogre (oil) is the current leader of the team, it is donkey – representing the products – which is acting like a, err, donkey. Although we see the true relevant US benchmark for oil – Brent crude – at $110, this is not being driven by domestic demand. After all, US gasoline demand is up a mere 0.1% versus last year. Nonetheless, we see retail prices stubbornly and steadfastly high due to oil’s global, not domestic, demand growth.

Despite all the serious overtures above, please have a happy holiday period, and remember….it’s a wonderful life.